Product innovation and new technologies are accelerating the democratization of private markets, according to State Street’s new report, 2025 Private Markets Outlook: Driving success in volatile environments. The report reveals the biggest trends affecting institutional investors in Australia, drawing on our latest global survey of 480 investment firms.

We focus on three crucial themes, each of which has implications for the future of private equity, private credit, real estate and infrastructure.

The democratization of private markets: The survey highlights a shift toward retail-like products in private markets. Australia’s respondents in the survey were particularly bullish on this trend: 67 percent of them say that at least half of private markets fundraising will come through such products in as little as two years’ time.

Several developments could help unlock growth in retail-style products, including product innovation. Almost half of Australian respondents (47 percent) cite developments in the semi-liquid fund space as a key driver that could make private markets investing more accessible for investors in defined contribution schemes. The need to lower minimum wealth thresholds is also viewed as a key development by 60 percent of Australian respondents.

A focus on quality: The shift from quantity to quality is now entrenched in investment strategies, with respondents focused on due diligence and risk assessment, as well as management at the asset, portfolio and manager levels.

The emphasis on quality can also be seen in a shift in capital allocation plans from emerging to developed markets. Developed Europe is getting more attention, with 63 percent of limited partners (LPs) in the survey planning investments in this region within the next two years (up from 43 percent in 2024). Not surprisingly, developed APAC is more of a priority for Australian institutions, with 75 percent intending to focus on these markets. However, further evidence of the focus on quality is seen in the fact that emerging APAC saw a decline in investment interest, with only 14 percent of LPs planning to invest in the region, down from 25 percent in our 2024 research.

AI adoption in private markets: The AI revolution is already underway, with 57 percent of Australian respondents recognising the opportunity to use GenAI-based large language models to make better use of their unstructured information.

Australia’s investment institutions appear to be trailing their international counterparts in this domain and will need to move swiftly, as peers are already developing or planning use cases. Resolving fragmented data infrastructures and manual workflows will be critical, as these limitations impede the ability to centralise and standardise unstructured data, both of which are foundational for the successful deployment of GenAI technologies.

The report goes on to explore why private markets are proving to be resilient at a time of increased market volatility and geopolitical uncertainty, as well as which private asset classes are most likely to benefit from the three trends outlined above.